Nigel Farage, the former leader of Ukip, has called for a royal commission to investigate this “debanking.”
New data reveals that banks in the UK are closing more than 1,000 accounts every working day, sparking controversy over the practice of “debanking.” Nigel Farage, the former leader of Ukip, has called for a royal commission to investigate what he deems a scandal. The number of customers facing account closures has seen a significant surge, prompting concerns over transparency and accountability within the banking sector.
The figures were obtained through a freedom of information request made to the Financial Conduct Authority (FCA) and reported by the Mail on Sunday. In 2016-17, just over 45,000 accounts were shut by banks. However, the total has increased each year since then, reaching over 343,000 accounts in 2021-22, averaging well over 1,000 closures for every business day.
When individuals or organizations have their bank accounts closed, they often receive little or no explanation for the action, leaving them in a state of uncertainty. Banks sometimes cite concerns over financial crime, such as money laundering and fraud, as the reason for account closures. However, critics argue that there is often a lack of clarity and accountability in these decisions.
Nigel Farage himself became embroiled in the debanking controversy when a subject access request revealed that his political views played a role in the closure of his account with NatWest subsidiary Coutts. The fallout from his case led to the resignation of Dame Allison Rose, the chief executive of NatWest group, and Peter Flavel, the chief executive of Coutts. Farage has also called for Sir Howard Davies, Nat West Group’s chair, to step aside.
The new data has intensified the pressure on banks, especially NatWest and Coutts, to provide comprehensive explanations for their actions. The growing row has resulted in calls for greater scrutiny and accountability in the debanking process.
Farage’s proposition of a royal commission to examine the problem is being supported by other right-wing figures who have rallied behind him, adding weight to the call for holding banks accountable.
The issue of “politically exposed persons” has added complexity to the debanking controversy. An estimated 90,000 individuals, including some politicians and their families, have been categorized as such, leading to bank rejections. Recently, anti-Brexit campaigner Gina Miller urged the FCA and the government to intervene to ensure that new parties and MPs have access to banking services.
Pro-Brexit groups have also reported encountering problems. Energy Secretary Grant Shapps revealed that his family had experienced debanking due to being politically exposed persons. Shapps mentioned one bank’s demand for 18 years’ worth of payslips before they would allow him to be a customer.
While politicians are affected by debanking, most of those impacted are ordinary individuals and small businesses trying to carry out their daily activities. Some have found themselves debanked merely for holding legal cryptocurrency or gambling accounts. Others, especially non-UK-born individuals, have experienced account closures after making or receiving international payments.
Until now, banks have often relied on money-laundering regulations to withhold specific reasons for account closures. The FCA, commenting on the data, suggested that increased monitoring of accounts might contribute to the rise in closures.
The government has announced plans to revise rules regarding bank account closures, including the introduction of longer notice periods before shutting down accounts. The Federation of Small Businesses emphasizes the importance of informing customers about the reasons for account closure whenever possible, to ensure swift resolution of any misunderstandings or misinterpretations.
Considering the concerns raised by affected individuals and businesses, the government, financial regulators, and banks themselves must work together to find a fair and transparent resolution to the debanking issue. Striking the right balance between addressing financial crime risks and safeguarding access to banking services for legitimate customers will be critical in restoring trust in the banking sector.
As debanking continues to make headlines, the urgency of the situation demands prompt and effective action. Individuals, small businesses, and public figures alike are calling for a more robust approach to tackle the debanking phenomenon and ensure that financial services are accessible to all while upholding the highest standards of integrity and security. The road ahead will require collaboration, openness, and a commitment to finding equitable solutions to safeguard the interests of all stakeholders involved.